Fema Corner

Foreign Travel

Indian & Foreign Currency - How much to carry on travel out of India

Planning an Overseas Travel? How much of Indian currency or foreign currency can you carry? Are there any regulations governing this? What do you do with unspent balances of foreign currency you had from your previous travel? Read on to know the fundas.

A Resident or Non Resident travelling out of India, cannot carry INR in excess of Rs. 25,000.

If you are a Resident or Non Resident, you need to declare to Indian Customs if you are bringing foreign currency notes in excess of US$ 5,000 or equivalent. If you happen to bring foreign currency notes not exceeding US$ 5,000 equivalent but the aggregate of foreign currency notes, bank notes or TC you bring is in excess of US$ 10,000 or its equivalent, you still need to declare. Any unspent balances from such a declared amount can be taken out of India as well.

You can take out of India any amount of foreign exchange as permitted to be drawn by your Authorised Dealer Bank, Money Changes or other Authorised Persons (AP). You cannot carry foreign currency on travel to Nepal or Bhutan.

You can take out of India any amount of foreign exchange as permitted to be drawn by your Authorised Dealer Bank, Money Changes or other Authorised Persons (AP). You cannot carry foreign currency on travel to Nepal or Bhutan.

You can keep only up to US$ 2,000 out of the unspent balances of foreign exchange acquired from the AP for prior travels.You can use this for your next travel abroad.

You can keep only up to US$ 2,000 if you received as gift or honorarium, or as payment for services rendered abroad while on travel abroad.You can use this for your next travel abroad.

You can keep only up to US$ 2,000 if you received as gift or honorarium or as payment for services rendered, from a visiting nonresident. You can use this for your next travel abroad.

[Source: Foreign Exchange Management (Export and Import of Currency) Regulations, 2015 and Foreign Exchange Management (Possession and Retention of Foreign Currency) Regulations, 2015 – Contents updated till 27 Aug 2022

Immoveable Property in India

Acquiring and Transfer of Immoveable Property in India

You are a Non Resident and want to buy or sell an immoveable property in India? Then you should know these fundas!

You need to be an Indian Citizen or atleast an Overseas Citizen of India (OCI) to buy immoveable property in India. An OCI is one who is registered as an Overseas Citizen of India Cardholder.
So, if you are a foreign citizen and not an OCI, you cannot buy immoveable property in India. The only exception is when you make a joint acquisition of the property along with your spouse who is an NRI or OCI and the marriage with the spouse has subsisted for atleast 2 years prior to the acquisition.
So, what if you are an Indian Citizen or OCI. Know these facts:
You can buy immoveable property, but not Agricultural Land, Plantation land and Farm Houses. These are reserved for Resident Citizens!
You can buy only through money brought into India by banking channels, or by debit to your Non-resident accounts maintained in India. You cannot use local money.
You can also receive by way of gift, an immoveable property other than agricultural land, plantations and farm houses from a Resident or Non Resident Indian Citizen or OCI.
You can inherit an immoveable property from a Non Resident (and, of course a Resident) who had acquired the property in accordance the FEMA regulations. Being an inheritance, this can also include the 3 specified items, Agricultural land, Plantations and Farm House. But when you want to gift these 3 specified items, you may do so only in favour of a resident of India who is an Indian Citizen
You can continue to hold an immoveable property acquired when you were a resident of India. However when you or your successor want to sell, repatriation from India requires specific approval of the RBI. This is so even if you had acquired the property by inheritance from a person in India. Even here an approval may not be required up to US$ 1Mn as it is specifically provided in regulations governing remittance of assets that repatriation of sale proceeds of assets/assets acquired by way of inheritance by NRO/PoI is permitted up to US$ 1 Mn. Best way to steer clear of any controversy is to make a full disclosure to your Authorised Dealer when repatriating.
Should you want to sell an immoveable property, you can sell to a Resident or a Non-Resident Indian Citizen or an OCI. Repatriation is not permitted beyond 2 residential properties. If you want to gift to an NRI or OCI, the donee should be a relative as defined in Sec 2(77) of the companies Act.

[Source: Foreign Exchange Management ( Non-debt Instrument) Rules, 2019 as amended (which supersedes Notification No. FEMA 21(R)/2018-RB/Foreign Exchange Management (Acquisition and Transfer of Immoveable Property in India) Regulations, 2018) and Foreign Exchange Management ( Remittance of Assets) Regulations, 2016 – Contents updated till 7 Nov 2022]

Immoveable Property Outside India

Acquiring Immoveable Property Abroad

You are a Resident Indian and looking at investing in Real Estate abroad? Want to have your own villa in the exquisite surroundings in Zurich? What does FEMA have to say on investment in immoveable property outside India?

Read on…..

As a resident individual, you can acquire immoveable property outside India out of the amount permitted under the Liberalized Remittance Scheme (LRS) which currently stands at US$ 250,000 per annum.

If you are a Returning Indian and have a Returning Foreign Currency Account (RFC), you can use the balance to buy yourself a property. No questions asked!

If you don’t have one, you can still be a co-owner with a relative who is non- resident and purchase a property provided there is no outflow of funds from India. A relative means husband, wife, brother, sister or any lineal ascendant or descendent of the investor. So, if your spouse is a non- resident and wiling to fully fund the property, you can be a co-owner.

If you have sold any asset outside India, other than ODI which were acquired as per the provisions of FEMA, you can buy an immoveable property out of such sale proceeds.

You may receive a property by way of gift or inheritance from a resident of India who acquired the property as per FEMA provisions, or acquired when he was a Non-resident or inherited from a resident. So, let’s say your father was employed in the UK for about 20 years and acquired a small villa in London during his stay but is spending his retired life in India, you can inherit that property without having to take any permission.

You may continue to hold a property that you acquired when you were a Non Resident

If you are a resident of India but a national of a foreign State, you may continue to hold the property

If you have a company which has branches overseas, the company can purchase immoveable property for business purposes of the branch or residential purposes of your staff as per RBI directions from time to time.

Please note that any acquisition other than by the above means cannot be done without the general or special permission of the Reserve Bank of India.

[Source: Foreign Exchange Management (Overseas Investment) Rules, 2022 of 22 Aug 2022– Contents updated till 27 Aug 2022]

Borrowing from a Non Resident or Person of Indian Origin

You are an individual running your proprietorship concern, or partnership or LLP? Have a relative or friend abroad who is willing to help you with a loan to run your business? What are the FEMA regulations governing loans from Non Residents? Can you take a loan in forex or in INR? What should be the interest and repayment terms? These questions are bothering you? Let’s unravel them for you!

In Rupees:

For starters, the RBI permits you to borrow in Rupees from a Non Resident Indian and an OCI (Overseas Citizen of India).

The loan should come by way of inward remittance or from the lender’s NRE/NRO/NRE/FCNR/NRNR/NRSR accounts. The term of the loan shall not exceed 3 years and the interest thereon is linked to bank rate and cannot exceed 2 percentage points more than the bank rate. The bank rate is the rate at which RBI lends to Banks!

There are some restrictions on end use! You can’t use it to fund your proprietary businesses or receive it in your partnership firm or LLP if they fall under Chit fund business, or Nidhi Company business or for agricultural or plantation activities or real estate business (trading in real estate), or for construction of form houses; or for trading in development rights. These are sensitive sectors and hence the RBI does not want foreign funds to enter these businesses as loans!

You cannot use such borrowed funds for investment in company or partnership firm – the monies can come into the entities directly though) or on-lending except on-lending to infrastructural sectors or for parking in fixed deposits pending utilization for approved end-uses! The principal repayment and interest payments are non-repatriable and to be deposited into the NRO account fo the lender.

In Foreign exchange:

As far as borrowing in foreign exchange is concerned, an individual resident in India may borrow a sum not exceeding USD 250,000/- or its equivalent, or any other amount as decided by the Reserve Bank from time to time, from a relative outside India and subject to such terms and conditions as specified by the Reserve Bank from time to time in consultation with the Government of India.

An individual resident in India studying abroad may raise loan outside India not exceeding USD 250,000/- or its equivalent, or any other amount as decided by the Reserve Bank from time to time, for the purposes of payment of education fees abroad and maintenance subject to terms and conditions as specified by the Reserve Bank from time to time in consultation with the Government of India.

[Source: Notification No. FEMA 3R/2018-RB dated December 17, 2018/ Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 – Contents updated on 12 Sep 2022]

Repatriation of Assets from India

Ever since you relocated to US, you decided to make it your home. You are no longer able to maintain the house in India that you bought from your US earnings, nor are you able to wisely invest your monies lying in various forms in India. As an NRI, you are keen to know if you can repatriate all of those back to US. Here is what you need to know!

It is not only the sale proceeds of that house that you can repatriate, but a host of other assets[1]. These are deposit with a bank or a firm or a company, provident fund balance or superannuation benefits, amount of claim or maturity proceeds of Insurance policy, sale proceeds of shares, securities, immovable property (other than agricultural/plantation/farm houses) or any other asset held in India
You can repatriate up to a total of US$ 1 Million in a year of all the monies you have in India that are in the nature of current income from your Non-Resident Ordinary Account (NRO). Note the term ‘Current Income’. Current income excludes loans and borrowings and typically includes interest, dividends, rents etc.
Sale proceeds of house property is not current income, nevertheless it is expressly permitted under the rules[2] to repatriate the sale proceeds within the overall limit of US$ 1 Mn. Note that this is available only up to 2 houses in your life-tim.

You may note that remittances are possible only if you obtain a certificate in form 15CB from a Chartered Accountant in India that applicable taxes if any have been paid.

You need to execute a form for repatriation from NRO account and provide the necessary declarations!

Bingo! Your money is now in your US bank account!

What if you acquired the property when you were a resident of India, or inherited a property from a person who was a resident of India and you want to sell it?

It is not necessary that for repatriating the sale proceeds, you had to acquire the immoveable property only by remittance of foreign exchange. FEMA[3] permits you to hold, own and transfer Indian currency/Indian security/immoveable property situated in India if you acquired them when you were a person resident in India, or inherited from a person who was a resident of India.

You are permitted by regulations[4] to repatriate the sale proceeds of such a property within the overall limit of US$ 1 Mn subject to production of necessary documentary evidence of the inheritance and related matters

In fact, these benefits are extended even to a Person of Indian Origin and you do not have to be an NRI. Meaning you could be a foreign citizen and still get these repatriation benefits as long as you are a PIO. Check our Post on ‘Are you a person of Indian Origin’?

What about foreign citizens who are not PIO?

If you have inherited an immoveable property from a person who acquired it when he was a resident of India, or you inherited from your deceased spouse who was an Indian Citizen-Resident, then you can repatriate up to the same US$ 1Mn per annum. You have to however show proof of your acquisition/inheritance/legacy of the assets to your Authorised Dealer.

The facility of repatriation is provided also to a foreign citizen (not a PIO) who retired from employment in India, and to a student who comes to India. In the case of a Student, the repatriation can only represent balances in his account derived out of remittances received from outside India through normal banking channels, or rupee proceeds of forex sold to an Authorised Dealer, or his stipend received.

Note that a foreign citizen other than an NRI or Overeseas Citizen of India (OCI) can never purchase immoveable property in India! That’s the reason, there is no provision for repatriation of sale proceeds of immoveable property by a foreign citizen retiring from employment and a Student.

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Footnote

1. Reg 2(v) read with Reg 4(2) of Foreign Exchange Management (Remittance of Assets), Regulations, 2016

2. Foreign Exchange Management (Non-Debt Instrument) Rules, 2019.

3. Sec 6(5) of FEMA 1999

4. Reg 4(2) of Foreign Exchange Management ( Remittance of Assets) Regulations, 2016; Para 8.1 of Master Direction 12/2015-16

Source: Foreign Exchange Management (Remittance of Assets) Regulations, 2016; Foreign Exchange Management (Non Debt Instrument) Rules, 2019; Master Circular 12/2015-16 on acquisition and transfer of Immoveable Property Updated on: 19 Nov 2022